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Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 3

CAUSES AND OUTCOMES OF CUSTOMER SATISFACTION


IN BUSINESS-TO-BUSINESS MARKETS RELATIONSHIP
MARKETING IN THE SOUTH AFRICAN CEMENT
MANUFACTURING INDUSTRY
Phineas Mbango*

Abstract

Close relationships between cement manufacturers and their customers in business-to-business


markets are becoming a necessity in today’s competitive markets. The literature search reveals that,
three constructs of relationship marketing (trust, commitment and satisfaction) are the most studied
and well known. This study contributes to the body of knowledge by adding two constructs (supplier
competencies and communication) as vital causes to customer satisfaction and the outcome being
customer loyalty and cooperation. The study produced a framework of dimensions of relationship
marketing in the South African Cement Industry and its hoped will help marketing managers in the
industry and related sectors in coming up with relationship marketing strategies that can go a long way
in helping them retain, attract, satisfy, and achieve long-term profitable relationships for both the
supplier and the customer. A judgemental sample of major cement customers (362) throughout South
Africa’s nine provinces were contacted using face-to-face interview technique with self-administered
questionnaires. The results support the conceptual model presented; supplier competencies, trust,
commitment and communication have a positive association with satisfaction; and satisfaction, in
turn, relates positively to all the two outcomes of cooperation and loyalty. It is recommended that a
cement manufacturer must invest in strategies that enhance trust, communication, commitment and
supplier competencies in order to satisfy its customers who will in turn contribute to customer
cooperation and loyalty.

Key Words: Satisfaction, Trust, Commitment, Supplier Competencies, Cooperation, Loyalty,


Relationship Marketing, South African Cement Manufacturing Industry

* Department of Marketing Management, University of Johannesburg, South Africa

1. Introduction constructs of relationship marketing (Morgan and


Hunt 1994; Barry et al., 2008; Caceres and
According to (Svensson et al., 2010:1), “Close Paparoidamis 2007; Bansal 2007).
working relationships between buyers and suppliers There is lack of consensus about the position of
in business markets are becoming more and more satisfaction in relationship marketing models and no
essential to achieving business success”. This view is agreed constructs that make up the relationship
supported by Anderson and Narus 1990; Ganesan marketing models in different industries as shown by
1994; Geyskens, Steenkamp, and Kumar 1999; the findings of Papassapa and Miller 2007; Rayruen
Morgan and Hunt 1994 who state that strong and Miller 2007; Skermeas and Robson 2008; Barry
relationships in business-to-business markets ensures et al., 2008; Palmatier et al., 2006; Ulaga and Eggert
stability to both suppliers and buyers. 2006, in which satisfaction, trust and commitment are
The three most studied dimensions of all simply put as dimensions of higher order. This
relationship marketing in literature are trust, supported with by the research outcomes on
commitment and satisfaction (Morgan and Hunt Relationship Marketing (RM) by Theron &
1994; Svensson et al., 2010; and Barry et al., 2008) Terblanche (2009), Athanasopoulou, (2009),
and there is no agreement on “how satisfaction fits in Gilaninia et al., (2011), Gounaris, (2005), and
a nomologigal network with trust and commitment Gummesson, (1994) among others as outlined above,
remains an issue in need of resolution”, Svensson et who argue that despite the existence of Relationship
al., 2010:1). In addition to these differences, there Marketing as first coined by Berry (1983), there exist
seems to be evidence from literature of a lack of no agreement on uniform dimensions/variables that
specific constructs of relationship marketing in constitute Relationship Marketing management.
business-to-business markets to specific industries. This article aims to provide some insight into
Trust and commitment are seen as the most important the position of satisfaction and determine what other

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constructs apart from trust and commitment can cause their customers in order to build customer loyalty and
a customer to be satisfied and what outcomes of increase profitability.
satisfaction specifically for the cement industry This paper supports the position of satisfaction
customers. Therefore, the researcher will attempt to as mediator between trust and commitment as
add more constructs of relationship marketing to the supported by Svensson et al., (2010:2). To add value,
existing dimensions mostly studied. The researcher the researcher has added two more constructs i.e.
added supplier competencies and communication as communication and supplier competencies, Goffin et
other causes of satisfaction and the outcomes being al., 2005. Therefore in this study satisfaction is seen
loyalty and cooperation. as a mediator between trust, commitment, supplier
The cement industry in South Africa was chosen competencies and communication with important
for the study because of the role it plays. According outcomes such as loyalty/or continuity and
to Rossouw (2015: Online), “The cement industry cooperation. The reasons for this as given by
adds significant value to South Africa and its people. Svensson et al., (2010:2) are as follows; “First, some
The value received by cement employees represented studies show that trust and/or commitment appear to
69% of the value created. This is a significant be antecedents or precursors to satisfaction, secondly,
contribution. According to Stats SA, more than 1.8 satisfaction may have a stronger association with
million people are employed by the cement industry. certain outcomes in comparison to trust and thirdly,
The state received 19% of value created in the form satisfaction may be the strongest component of
of direct taxes. The reality is that the state receives relationship quality”. In support of these findings,
significantly more if one takes into account the tax on Skarmeas et al., (2008:25) state, “Satisfaction is a
employee income deducted from the employees’ focal outcome of buyer-seller relationships that is
salaries and net indirect taxes like value added tax”. generally unlikely to develop in the absence of trust
“With South Africa’s massive unemployment and commitment”. In this study, the researcher have
rate (25%), mostly unskilled labour, the construction added two more (supplier competencies and
industry is seen as the sector which can provide a communication) as stated by Goffin et al.,
solution as it a labour intensive sector”, Olivier (2005:203). The above three reasons suggest that
(2015: Online). He goes further to say, “While satisfaction may serve as a more proximal cause of
inadequate infrastructure maybe the single biggest important outcomes than trust or commitment.
threat to Africa’s long-term growth, at the same time Therefore this study positions satisfaction as a
it also represents a significant opportunity for mediator between trust, commitment, supplier
investors in cement industry to finance infrastructure competencies and communication with important
such as the construction of ports, power stations and outcomes of loyalty/or continuity and cooperation.
housing projects”. “Therefore the cement industry In support of the inclusion of supplier
remains a key sector, serving all sectors of the South competencies and communication in the researcher’s
African economy. It has a strategic role to fulfil if the conceptual framework, Goffin et al., (2005:203) state
country is to develop and grow, as envisaged in the that, “Before partnership is possible, supplier’s
National Development Plan. Analysts believe that if competencies are vital and once supplier
government is to make inroads into solving the competencies exist then detailed communication is
unemployment crisis, the housing backlog, a required”. Communication is very vital in the
proactive relationship with the cement industry needs industry under study because of its technical nature.
to be developed”, Gauteng Development Agency Therefore product services need to be communicated
(2015: Online). timeously and effectively. Also supplier
competencies become very important in this industry,
2. Literature review, conceptual model, as quality and timeously delivery is of paramount
hypotheses and objectives of the importance. The above reasons made the researcher
study to include the two constructs in the study.
In support of the inclusion of the outcomes
“Relationship marketing as a management concept is (loyalty/or continuity and cooperation), Palmatier et
important for acquiring sustainable profitability and al., (2006) identified both continuity expectancy and
as a means of protecting an organisation from the cooperation as two most important outcomes of key
effects of competition. It has been proven that, those relational mediators of satisfaction, trust and
organisations that embrace relationship marketing, commitment. They reported that these relational
are in a better position to lower their marketing costs mediators had the largest combined influence on the
and be in a position to achieve their long term goals”, dyadic outcome of cooperation and had a substantial
Theron & Terblanche (2009:384). Athanasopoulou, impact of continuity expectation. In support of this
(2009:583), states that, “researchers have concluded augment, Ulaga and Eggert (2006) discovered that
that it is five times more expensive to acquire new satisfaction and commitment have a negative
customers than to keep existing ones”. Organisations association with propensity to leave a relationship. In
thus strive to develop long-term relationships with conclusion, the literature supports the inclusion of
continuity/or loyalty and cooperation as outcomes of

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the dimensions of relationship marketing when Based on the above literature, below is the
implemented correctly. Therefore the two outcomes proposed conceptual framework for the study:
are included in this study’s conceptual framework.

Table 1. Theoretical Framework of RM in Cement Manufacturing Industry in South Africa

The following are the proposed hypotheses for  To determine if satisfaction has an association
the study: with cooperation;
H1: Supplier competencies have a positive  To determine if satisfaction has an association
association with satisfaction with loyalty.
H2: Trust has a positive association with
satisfaction. 3. Research Method
H3 Commitment has a positive association with
satisfaction. This article adopted a survey research design in order
H4 Communication has a positive association to determine the causes and outcomes of customer
with satisfaction. satisfaction in the South African Cement
H5 Satisfaction has a positive association with manufacturing industry. “The survey research method
cooperation. requires that individuals answer the same
H6 Satisfaction has a positive association with predetermined set of questions and that responses are
loyalty. selected from a set of possible answers to be recorded
The following are the objectives of the study: in a structured, precise manner”, Joseph et al.,
 To determine if supplier competencies have an (2009:235). Saunders et al., (2007:177) state that
association with satisfaction; “surveys are usually conducted using questionnaires
 To determine if trust has an association with which allow for the collection of standardised data
satisfaction; from a sizeable population in a highly economical
 To determine if commitment is associated with way and the survey strategy is perceived as
satisfaction; authoritative by people in general and is both
 To determine if communication has an comparatively easy to explain and to understand”.
association with satisfaction; Therefore, they continue, “the survey strategy allows

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you to collect quantitative data which you can analyse are unlikely to complete questionnaires when left
quantitatively using descriptive and inferential alone to do it.
statistics and data collected using a survey strategy The assistants were trained on issues relating to
can be used to suggest possible reasons for particular data collection, including how to approach
relationships between variables and to produce respondents and ethics in data collection. This
models of these relationships” (177). The personal approach is supported by Sekaran and Bougie
survey method (interview administered survey) was (2013:120), who state that “interviewers have to be
chosen for this study to obtain information from thoroughly briefed about the research and trained in
decision makers in the cement industry. As indicated how to start an interview, how to proceed with the
by Wilson (2012:131), “personal-interviewing questions, how to motivate respondents to answer,
methods involve meeting the respondent face-to-face what to look for in the answers and how to close an
and interviewing them using a paper based interview”. The training also helped the assistants to
questionnaire, a lap-top computer or an electronic familiarise themselves with the contents of the
notepad”. The personal-interviewing was chosen questionnaire. Respondents were approached in their
because it is more suitable for “business-to-business places of work/offices.
or organisational research which requires interviews Face-to-face interview technique with self-
with business executives” Burns & Bush (2010:280). administered questionnaires was chosen because,
Non-probability sampling in the form of according to Sekaran and Bougie (2013:124), this
judgemental sampling was used. Judgemental tactic has the advantage that “the researcher can
sampling was chosen because it is the most suitable clarify doubts, ensure that questions are properly
sampling technique for business-to-business markets, understood, they have the ability to rephrase the
according to Wilson (2012:192). Also of particularly questions, can establish and motivate respondents and
importance is the fact that “a carefully chosen this approach usually yields high response rate. The
judgemental sample may be better able to represent disadvantages may be that it takes time, costs more
the mix of potential respondents in a population than when a wide geographical region is covered,
even a probability sample as you can balance your respondents may be concerned about confidentiality
sample to be in keeping with known market of information given, interviewers need to be trained
characteristics” Wilson, (2012:192). and can introduce interviewer bias”. Despite these
The sample elements/respondents were major disadvantages, the face-to-face interview was chosen
customers of the three main cement manufacturing as it provides a higher response rate than other
firms in South Africa. A total of 362 respondents (in methods of interviewing.
all the nine Provinces) were targeted, making it a
large enough sample to be in a position to generalise 5. Findings and Discussion
the results to the entire population. The judgemental
sampling method was chosen because, to reiterate, the 5.1 Reliabilities and Validity of
research was conducted with the major customers of Measurement Scales used in the Study
cement suppliers. A judgemental sampling design is
“used where the collection of specialised informed Before subjecting the constructs to correlations,
inputs on the topic area researched is vital, and the firstly the reliabilities of the scales were carried out
use of any other sampling design would not offer using Cronbach’s Alpha Coefficient measurement.
opportunities to obtain the specialised information” Reliability “is the degree to which the observed
Sekaran and Bougie, (2013:259). variable measures the ‘true’ value and is ‘error’ free”,
Hair et al., (2006:8).
4. Data Collection Method The validity of a scale refers to the degree to
which it measures what it is supposed to measure,
Research assistants were used to collect data using Pallant (2007:7). The following activities were
structured, self-administered questionnaires. The performed to ensure validity:
research assistants were to set appointments and sit  The questionnaire was directly aligned by
with the respondents while the respondents completed the research objectives
the questionnaire. This was done in order to improve  Feedback from the pilot study was used to
the response rate. Questionnaires were placed in make the necessary adjustments to the final
envelopes and after completing them the respondents questionnaire
would then place them back in the envelopes  A large sample was used to improve the
provided and seal them. Another reason research accuracy of the results
assistants were used is because of the nature of the The closer the values are to 1, the greater the
sample design and the characteristics of the reliability of the scale. All the Cronbach’s Alpha of
respondents, who are senior business people who are the scales considered in this study indicates a good
difficult to get hold of and who have little free time or reliability (>.7).

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Table 2. Descriptive statistics

Descriptive Statistics
N Mean of the computed Std. Deviation Mean Std Deviation
constructs (computed) on a scale of 7 on a scale of 7
Competency_factor 356 24.55 3.521 6.14 0.88
Trust_factor 356 19.43 2.467 6.48 0.82
Commitment_factor 352 18.80 2.568 6.27 0.86
Communication_factor 355 19.13 2.531 6.38 0.84
Satisfaction_factor 354 25.33 3.222 6.33 0.81
Cooperation_factor 352 37.68 7.025 6.28 1.17
Loyalty_factor 353 18.71 2.669 6.24 0.89
Valid N (listwise) 331

All the means on table 2 are around 6, meaning 5.2 Correlation among constructs
that in general the sample agrees with all the items of
various construct involved in the study. All the According to Hair et al., (2006:171), “Correlation
Standard deviation which are less than 1 indicates coefficient (r) indicates the strength of association
that the opinions about the items of the various between any two metric variables. The sign (+ or -)
constructs are not significantly different across the indicates the direction of the relationship. The value
sample. range from +1 to -1, with +1 indicating a perfect
positive relationship, 0 indicating no relationship, and
-1 indicating a perfect negative or reverse relationship
( as one variable grows larger, the other variable
grows smaller)”.

Table 3. Correlation among constructs

Correlations
Compe- Trust_ Commit- Communi- Satisfac- Coopera- Loyalty_factor
tencies_f factor ment_factor cation_factor tion_factor tion_factor
actor
Competencies_factor Pearson
1 .747** .572** .825** .580** .529** .551**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Trust_factor Pearson
.747** 1 .507** .751** .640** .553** .595**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Commitment_factor Pearson
.572** .507** 1 .574** .388** .348** .369**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Communication_factor Pearson
.825** .751** .574** 1 .680** .622** .546**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Satisfaction_factor Pearson
.580** .640** .388** .680** 1 .813** .643**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Cooperation_factor Pearson
.529** .553** .348** .622** .813** 1 .748**
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362
Loyalty_factor Pearson
.551** .595** .369** .546** .643** .748** 1
Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 362 362 362 362 362 362 362

**. Correlation is significant at the 0.01 level (2-tailed).

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Table 4. Below summarises the findings and interpretation of table 3 on correlations among constructs

Factor
Construct Finding
Loading
There is a significant association between competencies factor and
.747
trust factor
There is a moderate association between competencies factor and
.572
commitment factor
There is a perfect positive association between competencies factor
.852
and communication factor
Competencies Factor
There is a moderate association between competencies factor and
.580
satisfaction factor
There is a moderate association between competencies factor and
.529
cooperation factor
There is a moderate association between competencies factor and
.551
loyalty
There is a moderate association between trust factor and commitment
.507
factor
There is a significant association between trust factor and
.751
communication factor
Trust Factor There is a strong association between trust factor and satisfaction
.640
factor
There is a strong association between trust factor and cooperation
.553
factor
There is a strong association between trust factor and Loyalty factor .595
There is a moderate association between commitment factor and
.574
communication factor
There is a moderate association between commitment factor and
.388
satisfaction factor
Commitment Factor
There is a moderate association between commitment factor and
.348
cooperation factor
There is a moderate association between commitment factor and
.369
loyalty factor
There is a significant association between communication factor and
.680
satisfaction factor
Communication There is a strong association between communication factor and
.622
Factor cooperation factor
There is a moderate association between communication factor and
.546
loyalty factor
There is a perfect positive association between satisfaction factor and
.813
Satisfaction Factor cooperation factor
There is a strong association between satisfaction factor and loyalty .643
There is a significant association between cooperation factor and
Cooperation Factor .748
loyalty factor

Interpretation of findings on variable also grows positively of .57 unit of


correlations using the structural model standard deviation.
 Correlation between Competencies and
 Correlation between Competencies and Trust is communication is equal to .83; which means
equal to .75; which means that when one of that when one of these two variables grow
these two variables grow positively of one unit positively of one unit of standard deviation, the
of standard deviation, the other variable also other variable also grows positively of .83 unit
grows positively of .75 unit of standard of standard deviation.
deviation.  Correlation between Trust and commitment is
 Correlation between Competencies and equal to .51; which means that when one of
commitment is equal to .57; which means that these two variables grow positively of one unit
when one of these two variables grow positively of standard deviation, the other variable also
of one unit of standard deviation, the other

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grows positively of .51 unit of standard service changes, and communicating proactively if a
deviation. delivery problem occurs”.
 Correlation between Trust and communication Satisfaction has a significant association with
is equal to .75; which means that when one of trust, cooperation and communication. Cooperation
these two variables grow positively of one unit has the strong association with loyalty. Loyal
of standard deviation, the other variable also customers are likely to cooperate with suppliers.
grows positively of .75 unit of standard Competencies have strong association with trust and a
deviation. moderate association with commitment, satisfaction,
 Correlation between Commitment and cooperation and loyalty.
communication is equal to .57; which means All the constructs studied in this paper, are
that when one of these two variables grow correlated. Therefore all the hypotheses of this study
positively of one unit of standard deviation, the are accepted and the conceptual framework as
other variable also grows positively of .57 unit presented in table 1 is adopted as the model of
of standard deviation. relationship marketing in the South African cement
 Correlation between Competencies and Trust is industry in South Africa.
equal to .75; which means that when one of
these two variables grow positively of one unit 6. Conclusions
of standard deviation, the other variable also
grows positively of .75 unit of standard The outcomes of this study indicate that satisfaction
deviation. plays a central role in relationship building in the
 Correlation between Competencies and Trust is South African Cement Industry. Customer
equal to .75; which means that when one of satisfaction has the strongest influence on customer
these two variables grow positively of one unit cooperation and loyalty. Thus making customer
of standard deviation, the other variable also satisfaction the most important finding as customer
grows positively of .75 unit of standard satisfaction plays a pivotal role in relationship
deviation. marketing in the cement industry in South Africa as it
leads to important outcomes of cooperation and
5.3 Discussion of the empirical results. loyalty. The two outcomes are crucial for business
success in terms of repeat purchase, referrals (word-
In this study, trust has the strongest positive of-mouth marketing), retention and long-term
association with all the variables. This is consistent profitability.
with most of the research in relationship marketing. Supplier competencies, Trust, Commitment and
Trust is mostly widely accepted concept in communication have been found to have a
relationship marketing (Svensson et al., 2010; significance influence on satisfaction and in turn,
Skarmeas et al., (2008); Skarmeas and Robson satisfaction have significance influence on
(2008); Morgan and Hunt (1994); Dwyer et al., cooperation and loyalty in the South African Cement
(1987). Trust according to Wilson (1995:337), “is a Industry
fundamental relationship model building block and as Thus, overall, to maintain customer loyalty and
such is included in most relationship models”. “In a cooperation to a cement supplier, a cement supplier
business-to-business relationship, (as in the case of may enhance all five aspects of relationship
this study), the customer will attempt to reduce its marketing dimensions which are supplier
perceived risk by selecting a supplier seen as capable competencies, trust, commitment, communication and
of performing reliably (credibility) and demonstrate satisfaction. As a result the empirical results suggest a
its interest in the buyer’s well-being (benevolence)”, major paradigm shift from production/sales
Eggert and Ulaga (2004:315). In this industry, orientation towards relationship marketing
customers trust a cement supplier if there is constant, orientation.
timely and regular communication, if the supplier It is recommended that a manufacturer of
demonstrate competence in the products they offer, if cement products must predominantly develop
they are satisfied with the supplier and if they strategies and procedures that ensures that products or
cooperate with the supplier. Therefore in the cement services offered matches or exceeds customer
industry, trust is one of the most important dimension expectations. This means a cement manufacturer has
of relationship marketing. to invest a lot of resources in satisfying customer
Communication has a very strong association needs in order to meet organisational goals and
with satisfaction, cooperation, trust, loyalty and objectives. Satisfaction leads to cooperation and
competencies because, it plays a vital role as loyalty which are important for a supplier to have a
according to Gilaninia et al., (2011:795), competitive advantage. Loyal customers are more
“Communication in relationship marketing means profitable and are likely to stay with the supplier for
keeping in touch with valued customers, providing long. These spread good word of mouth about the
timely and trustworthy information on service and organisation. Satisfaction leads to long-term
relationships commitment and decreased propensity

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to terminate relationships. “Thus it is fundamental other industries in different countries with different
that cement manufacturers must deliver a quality cultures.
service at all times to their customers, stressing not This study gives an opportunity to conduct
just the core service but also the peripheral ones, and future studies on other business-to-business
striving to cover aspects related not only to the relationships among different countries and cultures.
technical quality but also to the functional quality”’ A further study into smaller organisations may differ
Alvarez et.al (2011:27). from this but this study lays a foundation for further
It is recommended that, for a cement studies.
manufacturer to be able to consolidate its position in
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